Legislative Report – February 28, 2020

Volume 21 Number 4 – February 28, 2020

7th & 8th legislative days

Final approval given on bill to limit occupational taxes

After approximately three hours of debate, the Senate gave final approval to HB 147 by Rep. Chris Sells (R – Greenville) on Thursday. Currently, cities can pass an occupational tax with a majority vote of the city council; this bill requires passage of a local law in order for a municipality to impose an occupational tax. The bill now goes to the Governor’s desk for final approval. She has indicated she is supportive of the legislation.

The Montgomery city council voted to approve an occupational tax on February 18, which is now in jeopardy due to a retroactive provision in the bill that states that any tax not in place as of February 1 is prohibited. It is likely that the city will file suit over the provision should the bill be signed into law.

Bill to end police jurisdictions approved in committee

SB 142 by Sen. Chris Elliott (R – Fairhope) would require a referendum in November in each county “to decide whether the municipalities in that county shall continue to exercise extraterritorial authority beyond the corporate limits.” Extraterritorial jurisdictions, or “police and planning jurisdictions,” are 1.5- and 3-mile borders around cities. Residents and businesses located inside the police jurisdiction get municipal services like fire and police protection at a reduced cost.

The planning jurisdiction portion of the extraterritorial jurisdiction is especially important because it allows municipalities to enforce standards related to building codes, waste water removal, rights-of-way setbacks, and other smart growth standards.

If a majority of voters vote “no” on the November referendum, the police and planning jurisdictions in that county would end in January 2023. The bill also allows for the same referendum on a ballot after two years if 10% of voters from the previous county election petition for it.

Current state law states that police jurisdictions can extend three miles beyond the corporate limits of a city with more than 6,000 people and 1.5 miles beyond the corporate limits of cities with fewer than 6,000 people.

The Senate Governmental Affairs Committee approved the bill on Tuesday. It now goes to the full Senate.

Small cell bill approved in committee

Small cells are wireless transmitters and receivers designed to provide network coverage to smaller areas. The wireless industry has heavily invested in small cell technology in Alabama and nationwide to enhance 5G coverage. SB 172 by Sen. Arthur Orr (R – Decatur) would standardize small cell deployment statewide in an effort to speed up deployment.

On Wednesday, the Senate Fiscal Responsibility and Economic Development Committee approved the bill.

Conversations are ongoing with the cable industry, counties, cities, and others as the bill moves forward, and more changes may be made to the bill throughout the process.

Legislation introduced to restrict pharmacy benefit managers

SB 236 by Sen. Tom Butler (R – Madison) and HB 345 by Rep. Ron Johnson (R – Sylacauga) would restrict and regulate the use of pharmacy benefit managers (PBMs). PBMs are companies that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers. PBMs play a big role in keeping prescription drug costs down for consumers.

The legislation introduced this week would prohibit mandatory mail order pharmacies and mail order incentives. Mail order pharmacy services save consumers and employers approximately $6 billion per year.

The bill also

  • Adds new restrictions on pharmacy audits
  • Prohibits requiring members to use affiliated pharmacies
  • Requires annual disclosure of rebates and mail order reimbursement calculations

The rapid rise of the price of drugs is the largest single driver of healthcare costs. Patients are not in a position to negotiate drug prices, so many employers use PBMs to keep prices lower, which helps keep premiums and out-of-pocket costs down.

In addition to the savings PBMs bring private employers, they also keep costs down for the state of Alabama. PBMs save the Public Education Employees’ Health Insurance Plan (PEEHIP) $575 million annually, the State Employees’ Insurance Board (SEIB) $175 million annually, and ALL KIDS $35 million annually.

At time of publication, neither the House or Senate bill are scheduled in committee next week.

Upcoming legislative schedule

The House of Representatives and Senate will reconvene on Tuesday, March 3, 2020, at 3:00 and 2:30 p.m., respectively.